Musk and Twitter could reach an agreement to end the legal battle as early as Wednesday – source

WILMINGTON, Delaware, Oct 5 (Reuters) – Elon Musk and Twitter Inc (TWTR.N) could reach an agreement to end their litigation as early as Wednesday and pave the way for the world’s richest person to close his deal. $44 billion for the social media platform, a source familiar with the dispute told Reuters.

Chancellor Kathaleen McCormick, a Delaware Court of Chancery judge, wrote: “The parties have not filed a stipulation to stay this action, and neither party has requested a stay. So I continue to head to our trial which is due to begin on October 17, 2022.”

Musk, who is also CEO of electric car maker Tesla Inc (TSLA.O), offered on Twitter late Monday that he would change course and stick to his April deal to buy the company for $54.20 a share if Twitter dropped its lawsuit against him.

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Musk’s proposal on Monday included a condition that closing the deal was pending receipt of the necessary debt financing. The potential deal would likely remove that condition, said the source, who spoke on condition of anonymity because the talks are confidential.

Twitter’s legal team and Musk’s attorneys briefed the judge on Tuesday on their attempts to try to overcome mutual mistrust and find a process to close the deal.

A lawyer representing a proposed class action lawsuit against Musk on behalf of Twitter shareholders has written to McCormick to say Musk should be required to make a “substantial filing” in the event that he again reneges on his pledge to shut down. Musk should also be liable for interest for delays in closing the deal, the letter from attorney Michael Hanrahan says.

Musk is expected to be dropped off Thursday in Austin, Texas, which has provided Twitter with leverage in talks to seal the deal.

Musk quashed a deposition in late September, citing concerns about potential exposure by a Twitter attorney to someone who later tested positive for COVID-19, according to a court filing released Wednesday.

Shares of Twitter fell 1.3% to $51.35 on Wednesday afternoon. The stock on Tuesday hit its highest level since Musk and Twitter agreed in April that he would buy the company for $54.20 a share.

Musk said in July he was backing out of the takeover deal because he discovered Twitter misled him about the number of fake accounts, among other allegations.

Part of Musk’s case was based on allegations by Twitter whistleblower Peiter “Mudge” Zatko that became public in August.

Twitter’s legal team wanted to investigate whether Quinn Emanuel’s attorney, Alex Spiro, who led the case for Musk, contacted the whistleblower as early as May. The law firm said in court filings that its attorneys have not communicated with Zatko or his representatives.

Spiro did not immediately respond to a request for comment.

Twitter uncovered an anonymous May 6 email to Spiro from “a former Twitter executive leading teams directly involved with trust and safety/content moderation,” according to court documents. The sender offered to communicate “by other means”.

Zatko, who was Twitter’s chief security officer until his firing in January, said under oath that he had not communicated with Musk or Musk’s attorneys at Quinn Emanuel.

McCormick, the Delaware Court of Chancery judge, said in a Monday ruling that it was “at least plausible” that Zatko sent the anonymous email. She ordered Spiro to file a statement with the court at 4:30 p.m. EDT on Wednesday explaining his actions regarding the May 6 email.

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Reporting by Tom Hals in Wilmington, Delaware, and Anirban Sen in New York Editing by Nick Zieminski and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

Tom Hall

Thomson Reuters

Award-winning journalist with over two decades of international news experience, focusing on high-stakes legal battles on everything from government policy to business negotiation.

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